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1China Tax & Investment Express
China Tax CenterChina Tax & Investment Express
China Tax & Investment Express (CTIE)* brings you the latest tax and business announcements on a weekly basis. We selected some comparatively key announcements to provide for a synopsis and we also provide a link that leads you to the full content of each latest announcement (in Chinese). Please feel free to contact your EY client service professionals for further assistance if you find the announcements have an impact on your business operations.
CTIE does not replace our China Tax & Investment News* which will continue to be prepared and distributed to provide more in-depth analyses of topical tax and business developments in China.*If you wish to access the previous issues of CTIE and China Tax & Investment News, please contact us.
Tax circulars
► Notice regarding further extending the tax filing deadline for the period of February 2020 (Shuizonghan [2020] No. 27)
► A list of key COVID-19 epidemic preventative supplies (medical emergency)
► Notice regarding clarifying the scope of key supplies for prevention and control of the COVID-19 epidemic (Fagaibancaijin [2020] No. 145)
► Top concerns and answers related to the preferential tax policies for supporting the prevention and control of the COVID-19 epidemic
Synopsis
Subsequent to the issuance of MOF/GAC/STA Pubic Notice [2020] No. 6 (“PN 6”, i.e., PN regarding the exemption of import duties, import-level Value-added Tax (VAT) and Consumption Tax for goods imported for the prevention and control of the epidemic of COVID-19) and MOF/STA PN [2020] No. 8 (“PN 8”, i.e., PN regarding tax policies for supporting the prevention and control of the epidemic of COVID-19), the relevant government authorities further released a series of circulars to further address the relevant issues. (Please refer to the CTIE2020005 and CTIE2020006 for details of PN 6 an PN 8. You can also follow us on WeChat by scanning the QR Code on the last page of this CTIE to learn more details of our previous Wechat articles issued in this regard.)
Issue No. 202000828 February 2020
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Key features are as follows:
Further extended tax filing deadline
On 17 February 2020, the State Taxation Administration (STA) released Shuizonghan [2020] No. 27 (“Circular 27”) to further extend the tax filing deadline for February 2020 to 28 February 2020, except for that of Hubei Province.
According to Circular 27, where taxpayers are not able to complete tax filings as at 28 February 2020 or need to apply for a further extension due to the COVID-19 epidemic, they may lodge applications for extension and complete the tax filings accordingly if they can provide justifiable explanations in writing. In that case, no surcharges and penalties shall be imposed, and the taxpayers shall not be subject to downgrade of credit rating or marked as abnormal taxpayers. However, taxpayers shall be responsible for the authenticity of the information provided to tax authorities.
Detailed list of key COVID-19 epidemic preventive supplies (medical emergency) and the scope of key supplies for prevention and control of the COVID-19 epidemic
To implement the preferential tax policies as prescribed in PN 8 for manufacturing enterprises of key epidemic prevention-related supplies and taxpayers engaging in transportation of key epidemic prevention-related supplies, etc., on 14 February 2020 and 18 February 2020, the Ministry of Industry and Information Technology and the General Office of the National Development and Reform Commission announced the list of key COVID-19 epidemic preventative supplies (medical emergency) (hereinafter referred to as the “List”) and the scope of key supplies for prevention and control of the COVID-19 epidemic (hereinafter referred to as the “Scope”, i.e. Fagaibancaijin [2020] No. 145) respectively. The List and the Scope shall be adjusted dynamically according to the practical situation.
Practical issues
To facilitate taxpayers enjoying preferential tax treatments to support the prevention and control of the COVID-19 epidemic, from 11 February 2020, the STA has been answering frequently asked questions raised by taxpayers in this regard (hereinafter referred to as the “Q&As”). The Q&As cover various practical issues such as the tax deduction of donated assets through charitable organizations or directly to hospitals, application of VAT invoices during the COVID-19 epidemic.
Taxpayers are advised to read the abovementioned circulars as well as the Q&As in details. If in doubt, consultations with professionals are always recommended.
You can click this link to access the full content of Circular 27:http://www.chinatax.gov.cn/chinatax/n810341/n810755/c5144080/content.html
You can click this link to access the full content of the List:http://www.miit.gov.cn/n973401/n7647394/n7647399/c7678018/content.html
You can click this link to access the full content of the Scope:https://www.ndrc.gov.cn/xxgk/zcfb/tz/202002/t20200220_1220796.html
You can click this link to access the full content of the Q&As:http://www.chinatax.gov.cn/chinatax/n810219/n810744/c101510/c101520/c5143796/content.htmlhttp://www.chinatax.gov.cn/chinatax/n810219/n810744/c101510/c101520/c5143798/content.htmlhttp://www.chinatax.gov.cn/chinatax/n810219/n810744/c101510/c101520/c5143823/content.htmlhttp://www.chinatax.gov.cn/chinatax/n810219/n810744/c101510/c101520/c5144040/content.html
You can click this link to access the full content of PN 6:http://www.chinatax.gov.cn/chinatax/n810341/n810755/c5143155/content.html
You can click this link to access the full content of PN 8:http://www.chinatax.gov.cn/chinatax/n810341/n810755/c5143465/content.html
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► Public notice (PN) regarding starting the work on exclusion processes for the additional tariffs on certain goods imported from the United States under market-based procurement (Customs Tariff Commission PN [2020] No. 2)
Synopsis
On 17 February 2020, the Customs Tariff Commission of the State Council released Customs Tariff Commission PN [2020] No. 2 (“PN 2”) announcing the commencement of work on exclusion processes for the additional tariffs on certain goods imported from the United States under market-based procurement. Qualified goods imported from the United States in accordance with the principles of marketization and commercialization will be excluded from the additional tariff against the U.S. Section 301 within a certain period of time.
Key features mentioned in PN 2 are as follows:
Applicant
Any Chinese enterprise that intends to sign contracts to import relevant goods from the United States can apply for the tariff exclusion.
Scope of exclusion
The goods on the exclusion list (see attached) that can be applied for exclusion are part of the goods on which tariffs have not been stopped or suspended against the U.S. Section 301. Applicants may apply for exclusion for additional goods that are not on the list. There is no need to apply for goods that are imported from the United States under the import tax reduction and exemption policies and goods that are on the exclusion list as well as goods that are within the period of exclusion.
Method and time of application
Applicants should submit an exclusion application for market-based procurement purposes through the exclusion application system (website: https://gszx.mof.gov.cn). The exclusion application system will start to accept applications from 2 March 2020.
Application requirements
Applicants should fill in all the application information, such as tariff code, purchase amount, etc., as the reference for review. Explanations for the impact of additional tariff on the applicants should also be provided for the additional goods that are not on the list.
Application results and procurement implementation
Imported goods of the approved amount will not be imposed additional tariffs against the U.S. Section 301 within one year from the date of approval; the exceeding amount will be subject to additional tariffs. The additional tariffs that have been already levied before the approval will not be refunded.
Unsettled procurement with approval automatically expires at the end of the current month. Where the imports exceed the approved amount of the month, an application for additional exclusion needs to be submitted within the prescribed time for the approval by the Customs Tariff Commission of the State Council.
Relevant enterprises are advised to refer to PN 2 and the attached list for greater details and apply for exclusion in a timely manner to ensure a lower tariff rate and thus reduce tax burden. If in doubt, consultations with professionals are always recommended.
We have issued a WeChat news article (in Chinese) to discuss PN 2 in greater detail. For the WeChat news article, you can follow us on WeChat by scanning the QR Code on the last page of this CTIE and search key words to access the full contents of the alert.
You can click this link to access the full content of PN 2:http://www.gov.cn/zhengce/zhengceku/2020-02/18/content_5480381.htm
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► PN regarding VAT policies for supporting the opening-up of the commodity futures market (MOF/STA PN [2020] No. 12)
Synopsis
To support the opening-up of the commodity futures market, on 18 February 2020, the Ministry of Finance and (MOF) and STA jointly released MOF/STA PN [2020] No. 12 (“PN 12”) announcing the preferential VAT policies for commodity futures market.
According to PN 12, from 30 November 2018 to 29 November 2023, the bonded delivery of commodity futures that are opened to overseas investors as approved by the State Council shall be temporarily exempt from VAT.
Where the commodities actually delivered in above-mentioned futures transactions are imported or exported, they shall apply the prevailing import/export tax policies for commodities. The physical delivery of non-bonded commodity futures shall be conducted in accordance with Guoshuifa [1994] No. 244 (“Circular 244”, i.e., Notice regarding Specific Measures for VAT Collection on Commodity Futures).
You can click this link to access the full content of PN 12:http://jiangsu.chinatax.gov.cn/art/2020/2/19/art_8349_288736.html
You can click this link to access the full content of Circular 244:http://www.chinatax.gov.cn/chinatax/n359/c516/content.html
► Implementation Plan for Fully Deepening the Construction of an International First-class Business Environment in Shanghai (Huweifa [2020] No.1)
Synopsis
In order to further optimize the business environment and promote the core competitiveness of Shanghai, on 19 February 2020, the Shanghai municipal government released the “Implementation Plan for Fully Deepening the Construction of an International First-class Business Environment in Shanghai” (hereinafter referred to as the “Plan”). The Plan covers 36 measures including one-stop online government services platform, “one form and one window”, promoting the convenience of tax administration to reduce the burden on enterprises, promoting the implementation of the negative list for market access, etc.
Key features of the Plan are as follows:
General target
Further explore and implement reform measures by drawing on international and domestic practical experience to build Shanghai into one of the open economic centers with the most convenient environment for trade and investment, the highest administrative efficiency, the most standardized government services, and the most effective system of law.
One-stop online government services platform will aim to:
► Promote the in-depth integration of one-stop online government services;
► Promote the application of e-certificates, e-seals and e-files, and online submissions;
► Strengthen information security.
Create a more internationally competitive business environment
► Fully promote “one form and one window” (i.e., one application form and the business permit issuance through one service window) for business startup;
► Promote the convenience of tax administration to reduce the burden on enterprises;
Business circulars
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► Deepen the reform of cost cut for cross-border trade;
► Establish a fair market supervision system;
► Promote the creation, protection and utilization of intellectual property.
Strengthen the protection and stimulation of market entities’ vitality
► Promote the implementation of the negative list for market access;
► Promote the reform of “Separating Permits from Business Licenses”;
► Improve the convenience of business deregistration.
Chinese enterprises and foreign-invested enterprises that have established businesses or plan to do business in Shanghai are advised to read the Plan for more details and to leverage on the benefits that they may bring about. If in doubt, consultations with professionals are always recommended.
We have issued a WeChat news article (in Chinese) to discuss the Plan in greater detail. For the WeChat news article, you can follow us on WeChat by scanning the QR Code on the last page of this CTIE and search key words to access the full contents of the alert.
You can click this link to access the full content of the Plan:http://wap.sh.gov.cn/nw2/nw2314/nw2319/nw12344/u26aw64019.html
► Notice regarding temporary reduction and exemption of social insurance contributions borne by enterprises (Renshebufa [2020] No. 11)
Synopsis
To support stability of employment and reducing the risk of redundancy due to current epidemic challenges, on 20 February 2020, the MOF, STA and Ministry of Human Resources and Social Security jointly released Renshebufa [2020] No. 11 (“Circular 11”) announcing the temporary reduction and exemption of social insurance contributions borne by enterprises.
Key features of Circular 11 are as follows:
► Beginning from 1 February 2020, based on the epidemic situation and the fund affordability, provincial governments (except for Hubei Province) may consider granting medium, small and micro-sized enterprises exemption from employers’ contributions of basic pension insurance, unemployment insurance and work-related injury insurance (hereinafter referred to as the “three social insurances”) for no more than five months. Besides, the contributions of the three social insurances for other employers (e.g., large enterprises, excluding the government authorities and public institutions) may be halved for no more than three months.
► Beginning from 1 February 2020, the employers (except for the government authorities and public institutions) from Hubei Province may be exempted from the contributions of the three social insurances. The exemption period shall not exceed five months.
► Where the enterprises are affected by the epidemic with severe difficulties in production and business, they may apply to defer the payment of the social insurance premiums for no more than six months without any penalties.
Relevant enterprises are encouraged to read Circular 11 for more details.
You can click this link to access the full content of Circular 11:http://www.gov.cn/zhengce/zhengceku/2020-02/21/content_5481861.htm
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► Notice regarding further improving financial services in the period of prevention and control of the COVID-19 epidemic (Yinbaojianbanfa [2020] No. 15)http://www.cbirc.gov.cn/cn/view/pages/ItemDetail.html?docId=890657&itemId=915
► Ten policy measures on supporting reopening of enterprises(Guoshijianzong [2020] No. 30)http://gkml.samr.gov.cn/nsjg/zhghs/202002/t20200215_311667.html
► Notice regarding promoting nationwide the measures introduced in Shandong for accelerating the reopening of foreign-invested enterpriseshttp://www.gov.cn/xinwen/2020-02/17/content_5480092.htm
► Notice regarding supporting foreign trade and promoting consumption in the period of prevention and control of the COVID-19 epidemic (Shangzongfa [2020] No. 30)http://www.mofcom.gov.cn/article/b/fwzl/202002/20200202937077.shtml
► Notice regarding the abolishment and revision of certain regulatory documents (Yinbaojianfa [2020] No. 5)http://202.106.120.178/cms/show.action?code=publish_8a8380b9645fe4f50164d3e2cdee543a&siteid=100003&newsid=0a58c656d0f449e384fe381542e4d0fa&channelid=0000000700
► Notice regarding revision of the “Administrative Measures for Pilot Domestic and Foreign Currency Exchange Franchise Businesses for Individuals” (Huifa [2020] No. 6)http://www.safe.gov.cn/safe/2020/0219/15475.html
► Notice regarding strengthening the online approval services of investment projects in the period of prevention and control of the COVID-19 epidemic (Fagaidian[2020] No. 66)https://www.ndrc.gov.cn/xxgk/zcfb/tz/202002/t20200220_1220819.html
► Notice regarding matters related to implementing the policies on exempting the import-level duties/taxes for goods imported for preventing and controlling of the COVID-19 epidemic as stipulated by MOF/GAC/STA PN [2020] No. 6 (Shushuifa [2020] No. 29)http://gkml.customs.gov.cn/tabid/1165/InfoID/39946/Default.aspx
Other business and customs related circulars publicly announced by central government authorities in the past week:
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Contact usFor more information, please contact your usual EY contact or one of the following EY’s China tax leaders.
Our tax leaders by market segment and service areas
Martin Ngai (China North) +86 10 5815 3231 [email protected]
David Chan (Hong Kong SAR/Macau SAR)+852 2629 [email protected]
Patricia Xia (China Central)+86 21 2228 [email protected]
Heidi Liu (Taiwan) +886 2 2757 [email protected]
Clement Yuen (China South) +86 755 2502 [email protected]
Carrie Tang Business Tax Services+86 21 2228 [email protected]
Andrew ChoyInternational Tax and Transaction Services+86 10 5815 [email protected]
Paul WenPeople Advisory Services+852 2629 [email protected]
Bryan Tang Indirect Tax - Global Trade +86 21 2228 [email protected]
Vickie TanGlobal Compliance and Reporting+86 21 2228 [email protected]
Travis Qiu ITTS - Transfer Pricing+86 21 2228 [email protected]
Becky LaiTax Policy+852 2629 [email protected]
Author – China Tax CenterJane Hui+852 2629 [email protected]
Greater China Tax LeaderHenry Chan+86 10 5815 3397 [email protected]
Kenneth LeungIndirect Tax+86 10 5815 3808 [email protected]
Jesse LvITTS - Transaction Tax+86 21 2228 [email protected]
Patricia XiaTax Technologyand Transformation+86 21 2228 [email protected]
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